Small Business Labs

It's All About Leads

Yes, this is pretty obvious.  But we often overlook the importance of leads and lead generation.  Also overlooked is how central lead generation is to the business models of many of the Internet's most successful companies - and how lead generation is changing media and marketing. 

Google is, of course, all about leads via adwords.  So is eBay and all the other online markets.  For example, I just made a restaurant reservation using Open Table.  It is a public company worth $600 million that gets a big chunk of its revenue generating leads. 

We recently posted on social game companies.  Rapidly growing rapidly and hugely successful, these firms are lead generation platforms disguised as casual game companies. 

On the marketing side, firms that provide lead generation services are thriving while traditional marketing agencies struggle.  Hubspot, a successful Internet marketing firm that is an agency/services/web analytics hybrid, is a good example. 

The shift towards lead generation is also a major driver of the disruption of the media industry.  Traditional media's marketing strengths are awareness and branding.  Not good when advertisers are focusing on lead generation.  Most new media companies tightly focus on generating leads for their clients. 

The trends driving the need for leads are diverse and strong.  Increased competition is a key driver, as is the growing consumer and B2B customer immunity to traditional advertising.  

Enabling and driving this trend is the the increasing power of analytical software and the growing reach and data intensiveness of the Internet.  These tools and data are making it easier for even small businesses to run sophisticated lead generation programs. 

Like most trends, the shift towards lead generation is not new.  Many of the online methods and approaches considered innovative today were in use decades ago by the direct marketing industry.  But despite its age, the shift towards lead generation is just beginning.   

Intuit Trends - Social Data on Small Businesses

"Social data" is the buzzword that describes sharing aggregate or summarized data collected from or contributed by large numbers of users. 

A good example of social data is Intuit Trends, an early alpha product available on Intuit Labs.  Trends uses aggregated company financial data collected from the online version of the accounting package Quickbooks. 

The application lets small business owners, managers and their advisers explore industry financial trends, share observations, and compare their performance with their peers and/or competitors.

Social data applications only work if data specific to individuals or companies is kept private and secure.  Intuit Trends and other social data applications accomplish this by only providing access to aggregate or summary data, thus protecting the privacy of the data sources.

While the buzzword is new, the concept is not.  Industrial companies have long provided product service and performance data based on information collected from their customers.  But this has been expensive and hard to do.

The Internet in general - and cloud computing in particular - has changed this.  With data rapidly moving from individual PCs and servers to the cloud, social data applications are much cheaper and easier to develop and deliver.

We've recently been briefed on over a dozen social data applications currently under development.  These applications target a range of industrial and consumer markets.

Social data will be a hot field in the coming years and we expect substantial growth in the number, range and power of these applications. 

Disclosure:  Emergent Research has done work for Intuit in the past year.

The Growth of Small Business Analytics

There were two very interesting blog posts related to the use of analytics by small businesses over the last week.  Both caught my eye as interesting examples of the trend towards analytical software and automation.

The first comes from Tim Berry's blog via MyVenturepad.  Tim writes about the Huffington Post using A/B testing to pick article headlines.  Online A/B testing is a process where different people are randomly shown different versions of a web page, or in this case different article headlines.  After testing with a number of people, the version with the most success (in this case clicks) is then shown to everyone else. 

A/B testing has been in use for a long time in the direct mail industry and is commonly used by larger online firms.  It is interesting to see the use has spread to things like article headlines.

The other post comes from the American Express Open Forum blog and is written by Anita Campbell.  The article, Are You Ready For the Trend towards Marketing Automation, discusses the growing number of systems a small business can use to automate marketing processes.

The use of analytical tools is becoming key to business success, regardless of the size of the firm.  Small businesses need to be aware of this trend and understand how analytics can improve their performance.  These two articles are a good place to start.

4 Technologies that are Reshaping Business Intelligence

Franz Dill over at the emerging technologies blog Eponymous Pickle pointed out an interesting article in Information Week on business intelligence technologies. 

Business intelligence systems provide information on the history, current status or future projections of an organization.   Basically, anything that generates data that informs decision making could be considered a business intelligence system.

The article points out 4 technologies that are improving business intelligence systems:

1. predictive analytics:  the ability to do better business forecasting using a mix of data and information sources and analytical software.

2. real-time business monitoring:  the ability to better understand what is happening right now with the key performance factors of a business.

3.  in-memory processing of information: this is a bit geeky, but in-memory processing refers to ability to store and process lots of data and information at one time.  In-memory processing is required to do real-time analytics on large data sets. 

4.  Cloud delivery of business intelligence:  the use of cloud and software as service delivery methods increases business intelligence deployment speed and flexibility. 

Business intelligence systems provide insights on customers and business operations, improve decision making and reduce risk.   These systems are augmenting and replacing "seat of the pants" management techniques and becoming increasingly popular with small businesses. 

Mainstream Mashups and Small Business

The New York Times has an article on Microsoft's Popfly product, which is designed to be a consumer friendly online mashup creator.  Key quote:

"... (Microsoft) introduced an intriguing software Web service called Popfly that is intended to make it possible for nonprogrammers to plug together Web components and data sources quickly to create useful new Web services. For example, news feeds could be added to digital images, or data lists to maps."

The article is quite similar to another NY Times article on this topic published last fall - and I posted on it last fall.  I guess they like Popfly and the concept of nonprogrammers being able to create web applications.  I like it too.

Mashup technology and related programming tools has made it much easier and cheaper to create web based applications.  Mashup tools like Popfly are coming to mainstream web users both inside and outside of business.  Just as end user blog tools like Typepad made it easy and inexpensive for anyone to do online publishing, these new mashup tools will do the same for a variety of analytical applications. 

And just like blogging tools like Typepad have led to a wide range of new small media companies, end-user mashup tools will create a wide range of new small business opportunities based on the development of new online business applications. 

bMighty on Data Mining and Analytical Software

bMighty is a CMP Publications property targetting IT users at small and mid-sized companies.  They have an article on real-time data mining called "The Event Driven Orgainzation".  It is written by a Cisco executive, so it doesn't fall into the unbiased source category, but it is pretty interesting.  Key quote:

"The speed at which information is gathered and disseminated has changed, but the speed at which the underlying business processes deal with this real-time information has not yet changed sufficiently."

The article goes on to talk about using data mining and analytical software to better make use of the growing flood of information.

We're starting to see a growing small business digital divide as more small businesses embrace and use technology.  These firms often use technology to gain competitive advantage over relative to less tech sophisticated small businesses. 

Data mining- especially of customer information - is one of the key areas tech savy small businesses are gaining a competitive edge.

Google and Large Datasets

One of Google's blogs has a very interesting post called "Google is All About Large Amounts of Data".  The blog post talks about how Google is using their access to large datasets to improve search and speech recognition software. Key quote:

"As we get more data from more interaction with users and from uploaded videos, our systems will improve because the data trains the algorithms over time."

Basically what they are saying is the more data the better the results.  Better results means more usage, which leads to more data.  This is a classic example of economic concept of increasing returns to scale, and is a key reason Google continues to gain share in advertising, search and other areas. 

Scale used to require physical assets in the form of manufacturing plants and equipment.  In the online world scale is about the ability to collect, analyze and mine data.  This is as true for small businesses as Google.

NY Times on Mainstream Mash-Ups

The New York Times has an article discussing 3 tools for creating mash-ups.  Mash-ups are web applications or tools that combine several data sources or use several programs to create a new tool or application.  A good example is WalkScore, which combines Google Maps with location data on shops and services to determine how "walkable" a neighborhood and specific street address is. 

The NY Times article focuses on new tools from Yahoo (Yahoo Pipes) , IBM (QEDWiki) and Microsoft (Popfly) that are designed to make the creation of mash-up applications easier and even accessible to non-programmers.  Looking at the tool web sites, only Microsoft's Popfly seems to be really targeted at mainstream users.  The other two seem to be targeted at folks with someone programming skill. 

Related to this, the Fast Forward blog recently posted on Serena Software releasing an enterprise software mash-up suite targeting business users.  Key quote from the blog post:

"...there is an increasing backlog of IT projects in most enterprises. The vast majority of IT budgets are chewed up by infrastructure to get the current applications going. René spoke about the neglected long tail of simple applications left in the queue to the increasing frustration of the business side."

This fits very well with our research which consistently shows that one of the major attractions of Web 2.0 applications is end users can create and deploy them without having IT involved.  End user mash-up tools will expand the range of applications business end users can build and deploy.

Mash-up technology has made it much easier and cheaper to create web based applications.  While these specific tools may or may be successful, mash-up tools are coming to mainstream web users both inside and outside of business.  Just as end user blog tools like Typepad made it easy and inexpensive for anyone to do online publishing, the new mash-up tools will do the same for a variety of analytical applications. 

Airline Pricing, Farecast and Dueling Computers

Airline pricing has always been a mystery and a frustration for consumers.  The dizzying array of fares has been driven by over 30 years of work by the airline industry on complex computer models designed to maximize flight revenue and profitability.  The airlines call this revenue management, and the techniques have been so successful that they've been copied by many other industries. 

In response, companies are starting to offer computer-based services to buyers.  Farecast is online travel website that finds cheap airfares and also predicts whether the prices will go up or down over the coming weeks.  From their website:

"Do you ever wonder if you could save money on airfare by buying today or waiting a day or two for a price drop? We predict where fares are going and show where they've been—now for more than 75 home airports."

Basically, Farecast is providing consumers with computer models to duel the airline computer models over airfares.  This type of analytical tool arms race is happening in wide range of industries, as both buyers and sellers strive for the best deal. 

For those interested in these techniques, the Revenue Management Forum blog posts regularly on this topic.

Prediction Tool List

I posted earlier about a new book called "Super Crunchers".  The author is collecting links to web based prediction tools and posting them here.  He currently links to about 30 tools.  Lots of fun prediction tools including:

• MLB playoff predictions
• How tall your child will be
• How long you will live
• Whether or not you should buy an airline ticket now or later
• The risk of business bankruptcy (2 tools)

The list should grow rapidly - there are lots of these tools on the web and more are being added regularly.  More examples of the increasing role analytical tools are playing. 

I saw this on the Marginal Revolution blog.